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Sunday, July 19, 2009

Barb Isman, chief operating officer for Canadian Bioenergy Corporation, spoke at PMG’s AgProgress Conference in Kananaskis, Alta., in July. (For my complete coverage of the conference, click here.) Isman presented an update on biodiesel production in Canada, noting that her company is working with ADM to built a 265-million-litre biodiesel production facility on site at ADM’s canola crush plant in Lloydminster, Alta. With mandates coming on stream in B.C. and Alberta in 2010 and Canada as a whole in 2011, Canada will need 700 million litres of biodiesel just to meet these mandates, she said. Current capacity, spread over a number of smaller plants, is 220 million litres or so.In her talk, Isman talked about second and third generation source materials for biodiesel. Canola is a first generation material. Algae, which contains 46 per cent oil and doesn’t tie up farmland, is a second or third generation source, she says. She also noted that large petroleum companies are getting involved in these later generation products, and they’re also working on more efficient methods to convert the oil into useable energy.As if on queue, that day Exxon Mobil announced it will invest US$600 million in a project to develop production and harvest techniques for high-oil algae. The research partner is Synthetic Genomics. In a Dow Jones Newswire article, which appeared in The Globe and Mail, Emil Jacobs, VP of research and development for Exxon Research, is quoted saying the company looked “at all fuel options” and algae made the cut.The article says, “Commercially-viable algae biofuel is definitely in the realm of the future. Algae is rich in fat, which can be processed into fuel, and can reproduce much faster than corn and other land-hungry agricultural crops, all while living in brackish water.”It will be many years, if ever, before algae goes commercial — so canola biodiesel will remain a strong market outlook for Canadian canola growers for a good while yet.

Friday, July 10, 2009

Several federal agencies announced plans to fund biofuel research and production while proposing rules to include greenhouse gas emissions in the setting the national renewable fuel standard.

The U.S. Environmental Protection Agency proposed a new plan to boost biofuel production while requiring biofuel makers to cut greenhouse gas emissions during production.

The proposal to measure greenhouse gas emissions will surely be controversial. It would require refineries to consider the emissions produced by farming or converting forestland into farmland, transporting the feedstock, blending of the biofuels and the market consumption of the fuels. Biofuels would have to be produced with lower emissions than the gasoline and diesel they replace in order meet a national biofuel standard, the proposal said.

California approved a similar rule last month when it approved a precedent-setting low-carbon fuel standard. Ethanol companies lobbied hard against the mandate to count emissions from changes to land use. Vocal opponents to this mandate included big-shot biofuel investor Vinod Khosla and former presidential candidate and general Wesley Clark, who also is co-chairman of the biofuel group, Growth Energy.

The EPA's announcement arrived on the same day that the U.S. Department of Energy said it would dole out nearly $800 million for biofuel research and production projects. The money would provide a good boost for an industry that has struggled to commercialize new technologies or raise enough money to stay in business.

President Obama on Tuesday also directed the DOE, the EPA and the Department of Agriculture to form an interagency group to speed up the development and deployment of advanced biofuels, which refer to fuels made from non-food plants such as switch grass and algae, a well as from wood wastes and even garbage from city dumps. The group also will work on promoting the use of flex-fuel vehicles that can run on gasoline as well as gasoline blended with ethanol.

The government passed legislation in 2007 that set a goal of producing 36 billion gallons of a variety of biofuels for transportation by 2020. Reaching the goal could prove difficult, given the financial and political troubles that corn ethanol producers have been facing and the challenges of commercializing new technologies that new non-food plants or even garbage to make fuels (see U.S. Won't Meet Its Own Biofuel Mandate and Lignol's Cellulose Ethanol Plant Bites the Dust; Valero Seeks to Gobble Up VeraSun).

The legislation led to a flood of private equity investments in producing corn ethanol and developing new types of biofuels. But controversy erupted when environmental groups, cattle ranchers and other industry groups contended that the increase in corn ethanol production had prompted farmers to plant corn instead of other food crops, thereby jacking up food and feed prices. The mandate also drew fears that more forestland would be converted into cropland for making biofuels.

Texas even asked the EPA to modify the biofuel mandate last year, arguing that the requirement would severely harm the economy and environment (see EPA Denies Texas Ethanol Waiver).

On Tuesday, the EPA reaffirmed the production goal but proposed a new plan to reach it. But the EPA changed how the fuels are categorized and the expected production volumes for each category. The proposal also includes metrics for reducing greenhouse gas emissions during biofuel production.

By 2022, the refineries are expected to produce 16 billion gallons of cellulosic biofuels, 15 billion of gallons per year of conventional biofuels (i.e., corn ethanol), 4 billion gallons of advanced biofuels and 1 billion gallons of biomass-based diesel, according to the new proposal.

Refineries, blenders and oil companies would be have to increase their biofuel output incrementally, the amount of which would be determined by the EPA each year.

Refiners must factor in the emissions results from the biofuel production, including the impact by farming, in order to get credit for meeting the biofuel mandate.

The government hopes the new DOE funding for biofuels would help the industry move quicker on meeting the national goal.

The funding is split into four parts. About $480 million is geared for pilot or demonstration projects that combine technologies at each refinery to produce biofuels, heat and power and other bioproducts, according to the U.S. Department of Energy, which is overseeing the funding process. The DOE plans to award money to 10 to 20 applicants that can take their projects up and running in the next three years.

Another $176.5 million is set for companies that received government funding in the last two years and could use more money to build demonstration or commercial refineries.

The DOE is setting aside $110 million for basic science research. Roughly $25 million would go to establishing a small refinery for researchers to experiment with their projects. Another $35 million would be used to set up a research consortium among national labs and universities. Algal biofuel research would receive $50 million.

Last but not least, the DOE plans to give away $20 million to promote the blending of ethanol with gasoline. Some funds would be used for making E85 fuel (85 percent ethanol, 15 percent gasoline) more available at gas stations and figuring out the impact of even higher ethanol blends on regular cars, the DOE said.

Pennsylvania Gov. Edward Rendell announced Jan. 15 that the state has met the first in-state biodiesel production threshold of 40 MMgy. As a result, within one year every gallon of on-road diesel sold in Pennsylvania must contain a minimum of 2 percent biodiesel.

Pennsylvania House Bill 1202, which was signed into law July 2008, established a state renewable fuels standard, which requires biofuels percentage increases to occur as in-state production for biodiesel and ethanol reach certain levels.

Under the legislation, all retail diesel fuel sold must contain:

* 2 percent biodiesel once in-state production reaches 40 MMgy

* 5 percent biodiesel once in-state production reaches 100 MMgy

* 10 percent biodiesel once in-state production reaches 200 MMgy

* 20 percent biodiesel once in-state production reaches 400 MMgy

“The 2 percent biodiesel mandate will now become a reality because our state's biofuel producers have reached the first critical threshold established by the alternative energy law I signed last summer,” Rendell said in a statement announcing that the threshold has been reached. “Pennsylvania's producers can now manufacture 40 million gallons of biodiesel a year right here at home.”

Erie, Pa.-based Lake Erie Biofuels LLC said the company is “ready, willing and obviously able” to fulfill the state’s B2 mandate. The biodiesel producer has a production capacity of 45 MMgy, and was critical in reaching the threshold production level.

According to Biodiesel Magazine’s plant list, in addition to Lake Erie Biofuels, there are five other Pennsylvania-based biodiesel producers. These producers include: United Biofuels Inc., Keystone Biofuels Inc., Biodiesel of Pennsylvania Inc., Agra Biofuels Inc., and United Oil Co. The combined production capacity of these six biodiesel refineries is 77.5 MMgy.

The 40 MMgy threshold was reached in September, triggering the mandate. The production levels must be sustained and verified over a three-month period by the Pennsylvania Department of Agriculture. The production volumes reported to the department were 3.9 million gallons in June, 2.9 million gallons in July and nearly 3.2 million gallons in August. The calculation used to determine the mandate trigger is the total gallons produced over a three-month period and then multiplied by four.

At least six months prior to the effective date of the mandated requirements, the Pennsylvania Department of Agriculture and Pennsylvania Department of Transportation will jointly make a certification as to whether there is sufficient infrastructure in Pennsylvania to meet the requirements. The agencies will conduct at lease three public hearings across the state for each report required under the legislation.

To view a copy of House Bill 1202, visit the Pennsylvania General Assembly Web site.

JEFFERSON CITY, Mo.– Minnesota has taken another step towards promoting domestic energy security and reducing the state's carbon footprint. Today, Gov. Tim Pawlenty signed a bill that will increase the current 2 percent biodiesel mandate to 20 percent by 2015.

According to the legislation, the current 2 percent biodiesel mandate will increase to 5 percent on May 1, 2009; to 10 percent on May 1, 2012; and to 20 percent on May 1, 2015.

"Implementation of the legislation starting in May of 2009 is timely and workable," said Chuck Neece, Chairman of the Minnesota Biodiesel Council, which championed the legislation. "The supply from the current biodiesel production capacity in Minnesota already exceeds 64 million gallons, more than enough to meet the five percent requirement, which would be 40 million gallons."

The increases are not automatic, however. There is built-in flexibility, including an approval process before moving to higher blends. This will allow the legislature, biodiesel producers and other stakeholders to gauge supply and demand impacts before moving to a higher blend.

Ed Hegland, Chairman of the National Biodiesel Board and a Minnesota farmer, praised the legislation's commitment to fuel quality. "The legislation includes quality assurance and national ASTM fuel specifications," he said. "We will continue to work with state leaders and stakeholders impacted by this legislation to ensure only quality fuel continues to enter the marketplace."